Loading judgment…
Facts
The assessee, Cane Development Council, challenged additions made by the Assessing Officer and upheld by the CIT(A) across four assessment years (2007-08, 2015-16, 2007-08, 2013-14). The additions included surplus of income over expenditure, disallowance of Santage Charges, and discrepancies between reported receipts and Form 26. The assessee contended that as a statutory body of the State Government, its income is not taxable under Section 2(24) of the Income Tax Act.
Held
The Tribunal found merit in the assessee's contentions, noting that the Assessing Officer had allowed similar claims in subsequent years and that previous ITAT and Allahabad High Court decisions in the assessee's own case considered its receipts non-taxable as a local authority. Consequently, the Tribunal directed the Assessing Officer to re-examine the issues de novo, considering these precedents and providing the assessee an adequate opportunity to be heard.
Key Issues
Whether the Cane Development Council's receipts are exempt from tax under Section 2(24) as a local authority, and if the various additions made by the Assessing Officer were legally justified.
Sections Cited
143(3), 2(24), 234A, 234B
AI-generated summary — verify with the full judgment below
Income Tax Appellate Tribunal, DELHI ‘F’ BENCH,
Before: SHRI ANUBHAV SHARMA & SHRI AMITABH SHUKLA
the order of ld. CIT(A), Muzaffarnagar for A.Ys 2007-08, 2015-16, 2007- 08 and 2013-14, respectively.
/DEL/2018 Cane Development Council
Since these four appeals pertain to same assessee and involve common issues, they were heard together and are disposed of by this common order for the sake of convenience and brevity.
ITA No. 1783/DEL/2012 [A.Y 2007-08]
Grounds raised by the assessee read as under:
“1. That, the assessment order passed U/s 143(3) and the addition made are illegal, bad in law and without jurisdiction. The CIT(A) erred in upholding the same.
2. The addition/ disallowances made by the assessing officer are illegal, unjust, and highly excessive and are not based on any material on record by the assessing officer. The total income of the appellant has been wrongly and illegally computed by the assessing officer at Rs.29,93,786.00 as against NIL INCOME. The CIT(A) has erred in upholding the same.
3) That, in view of the facts and circumstances, the assessing officer has erred in law and on facts in making the addition of Rs.6,34,792.00 on account of Surplus of Income over Expenditure, which is highly arbitrary, unjust and against the facts and /DEL/2018 Cane Development Council circumstances of the case. The Ld. CIT (A) has also confirmed the same.
4) That, in view of the facts and circumstances, the assessing officer has erred in law and on facts in making the addition of Rs.14,29,254.00 disallowance of Santage Charges, which is highly arbitrary, unjust and against the facts and circumstances of the case. The Ld. CIT (A) has also confirmed the same.
5. That, in view of the facts and circumstances, the assessing officer has erred in law and on facts in making the addition of Rs.9,29,740.00 on account of difference between the receipt shown by the assessee and FORM No. 26. The Ld. CIT (A) has also confirmed the same.
6. That, the assessing officer and CIT (A) has failed to appreciate before confirming the addition of Rs.29,93,786.00, that, the said amount is not come under the preview of definition of INCOME U/s 2(24) of the Income Tax Act, 1961 as the assessee appellant is the statutory body of the State Government, for performing the specific work for the development of Cane Agriculture, in the specified area.
The additions confirmed and the observations made by CIT (A) are unjust, unlawful and based on mere surmises and conjunctures. The additions made cannot be justified by any material on record.
/DEL/2018 Cane Development Council 8. That the explanation given evidence produced, material placed and available on record has not been properly considered and judicially interpreted and the same do not justify the additions/ allowances made.
9. That the interest U/s 234A & 234B has been wrongly and illegally charged as the appellant could not have foreseen the disallowances/additions made and could not have included the same in current income for payment of Advance tax. The interest charged under various sections is also wrongly worked out.
10. That the impugned Assessment Order passed by the Assessing Officer and order passed by CIT(A) are against the principles of natural justice and the same has been passed without affording reasonable and adequate opportunity of being heard.
11. The Appellant craves leave to add, amend, alter and or modify the grounds of appeal of the said appeal.
4. At the very outset, the ld. counsel for the assessee vehemently stated that the additions confirmed by the ld. CIT(A) and the observations made by him are unjust, unlawful and based on mere surmises and conjunctures. The additions made cannot be justified by any material on record. The ld. counsel for the assessee further submitted that the explanation given, evidence produced, material placed and available on record have not been properly considered and /DEL/2018 Cane Development Council judicially interpreted and the same do not justify the additions/ allowances made. Interest u/s 234A & 234B of the Act has been wrongly and illegally charged as the assessee appellant could not have foreseen the disallowances/additions made and could not have included the same in current income for payment of advance tax and the interest charged under various sections is also wrongly worked out.
The ld. counsel for the assessee continued by saying that the impugned Assessment Order passed by the Assessing Officer and order passed by CIT(A) are against the principles of natural justice and the same has been passed without appreciating the true facts of the case and the contemporaneous judicial precedents.
The ld. counsel for the assessee argued that in its own case, the Revenue has allowed the impugned expenses for A.Y 2017-18 and 2018-
The ld. counsel for the assessee further submitted that the co- ordinate bench of the Tribunal in assessee’s own case for A.Y 2014-15 dated 03.05.2023 have also held that the assessee is a local authority and its receipts are not liable to tax.
/DEL/2018 Cane Development Council 7. The ld. counsel for the assessee drew our attention to the order of the ld. CIT(A) for A.Y 2015-16 in which the first appellate authority had accorded relief while considering the decision of this Tribunal in ITA No.
2813/DEL/2005 in the case of M/s N.S. Committee as well as the Hon'ble Allahabad High Court in of 2012 order dated 16.01.2018.
The ld. counsel for the assessee further submitted that the principle laid down in the decision of the N.S. Committee [supra] hold true to the facts of the present case. The ld. counsel for the assessee accordingly submitted that the Assessing Officer has made the impugned addition and the ld. CIT(A) has confirmed the same without considering the above aspects of this case.
We have heard the rival submissions and have perused the relevant material on record. We find sufficient force in the contentions of the ld. counsel for the assessee. We find that the Assessing Officer has himself allowed the claim of expenses in the subsequent assessment years. Further, the ld. counsel for the assessee drew our attention to the decision of the co-ordinate bench in in the case of CIT Vs. M/s N.S. Committee and the judgment of the Hon'ble
/DEL/2018 Cane Development Council Allahabad High Court in the case of same assessee in of 2012 stating that the matter is covered.
We have noted that the ld. DR could not indicate towards any distinguishment of facts in the present case qua those in the orders referred to hereinabove.
Accordingly, in the interest of justice and fair play, we are of the considered view that the expenses ought to have been allowed to the assessee. Therefore, in view of the above factual matrix, we direct the Assessing Officer to decide the issues de novo after considering the decisions of the ITAT and the Hon'ble Allahabad High Court [supra] after allowing adequate opportunity of being heard to the assessee in accordance with law. The assessee is also directed to provide necessary information /documents as required by the authorities.
As mentioned elsewhere, the facts and circumstances of all the other three appeals under consideration are pari materia same as the facts discussed and decided in A.Y hereinabove.
We, therefore, set aside the issues to the file of the Assessing Officer for re-examination of the same and consideration thereof. All the /DEL/2018 Cane Development Council grounds in all the years under consideration are allowed for statistical purposes.
In the result, appeals of assessees in 4076/DEL/2018, 1885/DEL/2012 and 2617/DEL/2018 are allowed for statistical purposes.
The order is pronounced in the open court on 24.07.2025.